The US, EU, UK and Canada have imposed sanctions on China over its treatment of Uyghur Muslims in a co-ordinated move that sparked an immediate retaliation from Beijing.
The EU was the first western power to announce the sanctions and was hit with immediate retaliation from China’s foreign ministry.
In add, freshly appointed U.S. Trade Representative (USTR) Katherine Tai started her tenure off on a strong note.
A statement issued by the Office of the USTR yesterday, indicated Tai and Japanese Foreign Minister Toshimitsu Motegi have agreed following a series of calls to maintain regular engagement to ensure China’s questionable trade practices and human rights violations are brought to account.
Tai and Motegi also discussed World Trade Organization reforms to maintain equitable trade balances.
Ambassador Tai and Minister Motegi also agreed on the importance of maintaining regular, ongoing engagement on these and other critical trade issues.
At this situation added also the renewed lockdowns in Europe including Germany.
Yesterday the chairman of the US Fed has further downplayed their concerns about inflation in comments to the US government regarding the current state of the economy in the coronavirus world, however, all this happened have spooked macro markets very much.
In this context, crude oil was down nearly four bucks, with WTI hitting $57.8 and Brent $60.1, also compounded by higher crude inventory reports, the DOW was down 308 points while grains prices shed the morning’s losses in afternoon trading session.
Corn’s gains were also supported by ongoing planting delays in Brazil, which could increase 2020/21 export volumes if the Brazilian crop falls short of estimates.
Gains to new crop corn prices were capped by an anticipated acreage expansion in the U.S. during 2021, however, and by South Africa big crop’s, that will likely harvest 6% corn more bushels this year.
South Africa is the world’s sixth largest exporter of corn.
The safrinha, experienced massive planting delays, is now 86.2% complete in the country’s Center South region.
Planting progress remains about 10% lower than the historical average.
Brazil depends on the safrinha crop to supply its export market, but with a tight domestic corn supply this year, Brazilian exporters will likely need to compete with domestic processors to ship corn exports abroad.
Soybeans extended their gains. as rains in Brazil continued.
May 2021 soymeal futures registered a life-of-contract high yesterday on the soybean rally.
Dwindling soyoil stocks underpinned much of the strength in yesterday’s gains in the soy complex.
Malaysia’s palm oil exports are expected to pull back in 2020/21 to the lowest level since 2017.
Production in the region has been constrained due to pandemic restrictions.
The news pushed soyoil futures higher, as palm oil is a direct competitor to soyoil.
In the U.S., the recent push by the Biden administration to implement using more green fuel in vehicles will likely keep soyoil demand high.
Biodiesel is commonly used in heavy vehicles, namely semi-trucks, trains, and earth-moving and construction equipment.
Freight costs in South America are rising as delayed soy vessels awaiting export congest ports across South America.
Soybean shipments continue to be delayed.
It is likely to be the slowest soybean harvest season Brazil has seen in the past decade.
And as the ships wait to be loaded, ports are becoming more backlogged as sugar traders also vie for coveted loading spots.
Wheat prices followed those of corn and soybeans higher, thanks in large part to new export tenders issued by South Korea and Thailand.
In fact, Thailand has launched a tender for 430,000 t of feed wheat.
While, South Korea is buying 35,000 t of milling wheat from the USA and Canada.
In add, wheat continue to be more competitive than corn in feed formulations, which suggests an increase in consumption in this sector.
Gains, however, were capped by rains forecast in the Plains and by a stronger dollar.
European grains prices rebounded slightly in the wake of Chicago.
The rapeseed prices showed the biggest increase, but volatility was remaining high for all vegetable oils.
Only canola decreased yesterday.
Black Sea weather maps remain fairly moist into the start of April, with a fairly widespread inch still in the latest runs for the majority of the Russian winter wheat areas and slightly less forecast for winter wheat in Ukraine.
Although China’s Ag Ministry reported that some 9 million breeding hogs were culled during Jan/Feb due to the ASF outbreaks and the cull could mean an overall 200 million head reduction in pig numbers, we noted more reports emerged of Chinese buying interest for old crop Ukrainian of corn.
Aussie current crop cash markets nominally were stronger, but liquidity was limited.
Exporters are reporting further strengthening freight rates, the rally in ocean freight markets rolling forward.
Tonight we will comment on how they will close the sessions.
